Chances are, no matter what kind of business you own, you have to deal with receipts.
They love to clutter up your counter and your company accountant is probably buried under them.
Here’s what is key to understand: whether you’re a retailer, restaurant owner, or manage your own IT firm, you’re going to need those receipts.
Receipts are important because they help you track your finances, and keep you from losing the finances you’re trying to track.
There are two important reasons to keep your receipts, no matter what field of business you’re in.
1). To help with chargebacks
In case you’ve never heard of them before, a chargeback occurs when a customer disputes a financial transaction with your business, through their credit card issuing bank. These can happen for a multiple reasons, we’ll discuss chargebacks in depth another time, but here’s a few reasons why a chargeback may occur.
· Dispute over validity
· Dispute over quality
· Dispute over amount
There are some other reasons, but having a receipt is not going to be as beneficial for those reasons.
A dispute over validity is one step short of becoming fraud, a customer is claiming they do not recognize the charge as valid. Sending a signed receipt or a receipt with the customer’s information on it can help prove your case of a valid transaction.
If a customer is saying they ordered one product, and they received the wrong product, having a copy of what they ordered, and paid for, will help you prove that you provided them with what they ordered.
If the dispute is over a discrepancy in amount, a receipt can show a customer agreed to pay a certain amount.
Having a receipt will not always make the banks settle in a merchant’s favor, but it’s good protection for your business.
2). For tax purposes
You’ll want to keep all your receipts for business tax purposes.
Every. Single. One.
From keeping track of your business expenses from trips or a keeping paper trail of your in and out cash flow, keep all of them.
Small business owners generally have a higher tax rate than large corporations (thanks US government). Generally, having proof of your expenses will help you be able to write off some of the necessary expenses you encounter as a business owner.
How long should you keep them? The IRS and most Accountants recommend keeping receipts for at least three years.
Ask your accountant how long they’d like you to keep your receipts, as some will recommend roughly 7 years.
That doesn’t mean you have to be buried in paper forever.
You can scan your receipts and store them as PDF’s on your computer, or on a server or a cloud-based service, like Dropbox or Google Documents. (You can still keep your paper copies as a backup).
If you are going to throw them away, you need to dispose of them safely!
If you’re going to store receipts, secure them safely! Make sure you shred all receipts before throwing in the trash!
Want to talk to payment processing professionals?
We’re here to help you manage your business.
Want to experts who know how to handle your payment processing pains? Contact us here.